COUNTY OF WAYNE v. CITY OF DETROIT

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COUNTY OF WAYNE v. CITY OF
DETROIT

December 29, 1998No. 203397LC Nos. 00173694; 00191894Tax Tribunal

COUNTY OF WAYNE,

Petitioner-Appellee,

v.

CITY OF DETROIT,

Respondent-Appellant.

Before: O’Connell, P.J., and Gribbs and
Talbot, JJ.O’CONNELL, P.J.

This case presents the question whether the
doctrine of res judicata operates to prevent a party from
renewing a cause of action before the state Tax Tribunal where
the Tribunal resolved the identical controversy for the identical
parties in an adjudication concerning an earlier tax year. We
hold that it does.

At issue is the Wayne County Building, at 600
Randolph in Detroit, and whether respondent City of Detroit may
assess taxes against it. Section 7m of the General Property Tax
Act, MCL 211.1 et seq.; MSA 7.1 et seq.,
establishes an exemption from taxation for "[p]roperty owned
by, or being acquired pursuant to, an installment purchase
agreement by a county . . . used for public purposes
. . . ." The history of the Wayne County
Building has given rise to a question whether the building comes
under that exemption. The Michigan Tax Tribunal answered this
question in the affirmative following formal proceedings
concerning the tax year 1991. Wayne Co v Detroit, 7 MTTR
327 (Docket No. 110922, January 21, 1992). The City of Detroit
nonetheless assessed the building for taxes for the tax years
1992 through 1997, prompting the instant controversy. The Tax
Tribunal ruled that res judicata precluded reconsideration of the
factual or legal questions underlying its decision concerning the
tax year 1991, and thus granted Wayne County summary disposition
on that basis, declining to reconsider the question of the
building’s tax-exempt status on its merits. 9 MTTR 765
(Docket Nos. 173694 & 191894, April 28, 1997). We affirm.

We review applications of res judicata, as well
as decisions on motions for summary disposition, de novo as
questions of law. Phinisee v Rogers, 229 Mich App 547,
551-552; 582 NW2d 852 (1998). Under the doctrine of res judicata,
"a final judgment rendered by a court of competent
jurisdiction on the merits is conclusive as to the rights of the
parties and their privies, and, as to them, constitutes an
absolute bar to a subsequent action involving the same claim,
demand or cause of action." Black’s Law Dictionary (6th
ed, 1990) p 1305 (citation omitted). The doctrine operates where
the earlier and subsequent actions involve the same parties or
their privies, the matters of dispute could or should have been
resolved in the earlier adjudication, and where the earlier
controversy was decided on its merits. Energy Reserves, Inc v
Consumers Power Co, 221 Mich App 210, 215-216; 561 NW2d 854
(1997).

The City of Detroit argues that the doctrine of
res judicata does not apply to decisions of the Tax Tribunal. We
disagree. Res judicata applies to quasi-judicial administrative
decisions. Standard Automotive Parts Co v Employment Security
Comm, 3 Mich App 561,570; 141 NW2d 135 (1966). The
Tax Tribunal is a "quasi-judicial agency." Kostyu v
Dep’t of Treasury, 170 Mich App 123, 128; 427 NW2d 566
(1988), citing Wikman v City of Novi, 413 Mich 617, 629;
322 NW2d 103 (1982). Its decisions are subject to appeal by right
to this Court. MCL 205.753(1); MSA 7.650(53)(1). Because by its
nature the appeal process does not contemplate a new, original
action, decisions of the Tribunal are clearly intended to be
final decisions on the merits. See Dearborn Heights School
Dist No 7 v Wayne Co MEA/NEA, ___ Mich App ___, ___; ___ NW2d
___ (1998) (Docket No. 200468, issued December 8, 1998, slip at
5), citing Nummer v Dep’t of Treasury, 448 Mich 534,
551; 533 NW2d 250 (1995). Further, in the absence of legislative
intent to the contrary, the applicability of principles of
preclusion is presumed. Dearborn Heights School Dist, supra
at ___ (slip at 4), citing Nummer, supra at 548 and Lumley
v Bd of Regents for the University of Michigan, 215 Mich App
125, 133; 544 NW2d 692 (1996). For these reasons, where, as here,
identical parties raise again issues and defenses that were
resolved in earlier proceedings before the Tribunal, res judicata
operates to bind the parties to the earlier result.

The City of Detroit does not suggest that the
elements for application of res judicata are not present in this
case, but instead relies on the ancient case of Lake Shore
& Mich Southern R Co v People, 46 Mich 193; 9 NW 249
(1881), for the proposition that res judicata does not apply to
decisions of the Tax Tribunal. In Lake Shore, the state
successfully sued the defendant railroad in 1880 to recover taxes
for the years 1872 and after, id. at 208. An earlier
action concerning the same parties in the circuit court had
resulted in a judgment restraining the collection of taxes for
the years 1858 through 1861, id. at 207-208. The Supreme
Court held that the earlier proceedings were "not res
adjudicata against the State" in the later case, id.
at 207 (emphasis in original), on the grounds that the latter
involved a new controversy and a new cause of action, even though
the facts were "substantially alike," id. at
208. However, we note that the two proceedings concerned
"substantially" similar facts, not identical facts.
Further, in Lake Shore, "some" of the legal
questions from the first proceedings were raised again, id.,
not all. Because Lake Shore involved a subsequent
proceeding concerning similar, not identical, facts, and some,
not all, of the same issues, we do not read that case as holding
that adjudications concerning tax matters are wholly exempt from
application of the doctrine of res judicata.

Instead, we take guidance from the Supreme
Court’s more recent case of Corp & Securities Comm v
American Motors Corp, 379 Mich 531; 152 NW2d 666 (1967). In
that case, the Court cited res judicata and the broader concept
of estoppel by judgment,[1]id. at
536, in declaring that the decision from an earlier case between
a corporate taxpayer and a regulatory authority concerning the
inclusion of the taxpayer’s "reserve for deferred
Federal income taxes" for purposes of computation of its
annual franchise fee bound the parties regarding that issue
through any litigation concerning subsequent years. Id. at
537. The Court’s recognition of res judicata in the 1967
case trumps any implication in the 1881 case that tax cases are
not subject to preclusion doctrines.

Nor are we persuaded by the City of
Detroit’s public policy arguments. Indeed, public policy
would be poorly served if, in the face of unchanged
circumstances, taxing authorities were at liberty to renew
annually the assessment of taxes against a taxpayer who had won
recognition of a right to avoid those taxes.

Accordingly, we agree with the judgment below
that the preclusion doctrines of res judicata and collateral
estoppel apply to matters determined in litigation before the
state Tax Tribunal. See Xerox Corp v Kalamazoo, 76 Mich
App 150, 154; 255 NW2d 797 (1977) (presuming the general
applicability of res judicata to Tax Tribunal adjudications while
holding that the Tribunal applied the doctrine in error in that
instance); Chicago Pneumatic Tool Co v Mich Dep’t of
Treasury, 4 MTTR 202, 203-204 (Docket No. 48842, March 20,
1986) (expressly invoking res judicata). In this case, because
the parties, material facts (except for the tax years concerned),
and governing legislation involved in the past and present
controversies were identical, the Tax Tribunal correctly held
that res judicata brought the earlier adjudication to bear on the
instant controversy. The Tribunal thus properly declined to
reconsider the merits of the case, and we likewise need not reach
them.

Affirmed.

/s/ Peter D. O’Connell
/s/ Roman S. Gribbs
/s/ Michael J. Talbot

FOOTNOTES:

[1]"Estoppel
by judgment," also known as "issue preclusion," is
the doctrine according to which "when a fact has been agreed
on, or decided in a court of record, neither of the parties shall
be allowed to call it in question, and have it tried over again
at any time thereafter, so long as judgment or decree stands
unreversed." Black’s Law Dictionary (6th ed,
1990), p 550.